Abstract

This study investigated the effect of relationship marketing on customer loyalty in telecommunication companies, using a case study of Fako Division. Specifically, to analyse the effect of trust on customer loyalty in one hand and in the other hand the effect of commitment on customer loyalty in telecommunication companies Fako Division. The research employed descriptive research designs.

It also combined quantitative as well as qualitative research approaches. Questionnaires were used in data collection and the   data were analyse using the Ordinary least square Regression technique.  The total population of 386 customers in Buea was interviewed.

Our findings   of the study shows that customer’s trust, relationship commitment, complaint handling and customer communication affect loyalty of customers in telecommunication companies in Buea Municipality, thus an increase in customer relationship marketing at telecommunication companies will lead to a significant increase in the loyalty of customers.

The study recommends that there is a need of promoting trust, commitment, conflict handling and further communication related to empathy particularly among customers in the telecommunication company.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

It is clear that the customer is the only source of the companies’ present profit and future growth. And also creating loyal customers is at the heart of every business (Keller and Kotler, 2012). Customers are central to all marketing activities all over the world. Success and in turn profit is not unthinkable without customers. Moreover, companies incur millions of dollars to attract customers and make them loyal.

As the competitive environment becomes more turbulent, the most important issue the sellers face is no longer to provide excellent, good quality products or services, but also to keep loyal customers who will contribute long-term profit to organizations (Tseng, 2007). To compete in such overcrowded and interactive marketplace, marketers are forced to look beyond the traditional 4Ps of marketing strategy, which are no longer enough to be implemented for achieving competitive advantage.

Therefore, relationship marketing has become an alternative means for organizations to build strong, ongoing associations with their customers. As a part of marketing strategy, relationship marketing seek to acquire and retain customers by providing good quality customer services, and therefore has become one of the keys to success in acquiring strong competitiveness s in the present markets, because of its implications for access to markets, generation of repeat purchase, creation of exit barriers, and the view that it benefits all parties (Andaleeb, 1996).

Acquisition and retention of new clients are one of the most significant concerns of business; the telecommunication service industry is no exception to this. Yankee group, (2001), indicated  that  mobile operators  approximate  seven  times  higher  cost  of acquiring  new  client  on  retaining  existing  clients  on  an average  basis.  Normally, mobile operators  in  dynamic technological  environment  find  it  inexpensive  to  retain their  customer  base  rather  than  simulating  strategies  to acquire  them.

While recipient companies concentrate on acquiring new customers, mature ones try to focus on retention of the existing ones in order to provide themselves with the opportunity of cross-selling and as such gain competitive advantage (Lin and Wang 2006). This is strongly backed by the fact that one of the most significant ways of increasing customer’s value is to keep them for longer period of time. Due to the above stated fact, in order to retain customers a general problem is posed; which consist of knowing the factors that essentially influence customer loyalty to a given company?, It is as a result of the above stated problem that we deem it necessary to carry out this research.

Relationship marketing has received much attention in both academy and practice areas in the last few decades. It was during the last decade of the 20th century that relationship marketing began to dominate the marketing field (Egan, 2001). During this period relationship marketing became a major trend in marketing and management business. Relationship marketing is concerned about building customer loyalty by providing value to all the parties involved in the relational exchanges (Peng and Wang, 2006), as customer loyalty is the final goal of relationship marketing.

Buyers and sellers in markets achieve mutual benefits through developing relationships, which are not simple that a customer is 100 per cent loyal to a vendor (Stone & Woodcock &Machtynger, 2000). There are often switching behaviors occurred in different stages of a partnership relationship. Relationship marketing tactics are thus approaches to apply relationship marketing in practice (Tseng, 2007). Effective customer-oriented relationship marketing tactics may help marketers to acquire customers, keep customers, and maximize customer profitability, and finally build up customer loyalty.

The telecommunication industry is becoming one of the most important industries in the world. The telecommunication industry delivers voice communications, data, graphics, and video at ever increasing speeds. Telecommunication influences the world economy and the telecommunication industry’s revenue was estimated to be $1.2 trillion in 2006. The competition is also becoming more and more sharp. In order to obtain sustainable competitive advantage, telecommunication firms are forced to make innovation and do the best for customer satisfaction. Due to this, customer relationship marketing plays an important role in telecommunication industry. It demands a relationship-oriented strategy in marketing (Grönroos, 2004).

The telecommunication industry is one of the key industries for all economies and plays a significant role for socio-economic development. This industry over the past years has witnessed tremendous growth facilitated by technological advancements.

Lives have been changed from the use of cloud services, social media (Tichafa & Nyoni, 2017), mobile payment, mobile number portability, the internet, broadband and still there is much more coming in terms of technological change and investments in 4G and beyond, connected objects, artificial intelligence, big data analytics, virtual reality and much more (Balaji, 2017).

Fierce competition has forced the telecommunication companies to focus on creating lasting relationships with their customers so as to get insight on their desires in order to improve their delivery. For the telecommunication companies to achieve this they have to move from applying the traditional marketing mix to applying relationship marketing practices (Ali Raza, 2012).

Living  as  we  do  in  the  second  decade  of  the  twenty  first  century,  good  telecommunication  has  become  an  essential  requirement  to  sustain  high performance  and  quality of  life.  In Africa   telecommunications  has  expanded exponentially  over  the  last  decade  and  will  continue  to  do  so  during  this  decade, Cameroon in particular has experienced a growth of about 34.53% in its tele density.  Ali et al., (2010); 1.53% above continent’s average Ondiege P. (2010).

Mobile phones have become the quintessential means of communication, not just for social purposes, but also for work. The process of restructuring Cameroon’s telecommunication sector truly got under way in June 1995, when the authorities decided thoroughly to reform network industry sectors such as water, electricity and telecommunications with a view to creating a favorable environment in which to develop their infrastructure and services and thus to satisfy increasingly exigent demand.

The process took the form of liberalization, State withdrawal from the sectors concerned and the establishment of a market structure enabling Cameroon to remain in step with the especially rapid global developments in the telecommunication sector; indeed, in spite of the investments made, the coverage rate and quality of service offered had remained largely inadequate.

The Cameroon Telecom sector is passing through a dynamic transitional phase, as it is clearly undergoing the operation of market forces of demand and supply. The sovereignty of consumers is quite evident through their revealed preference in favor of economically rational decisions. Therefore, the task facing the managers in telecom sector is to focus on those activities that result in meeting or exceeding customer expectations.

Moreover, the forces of liberalization and globalization of telecommunication market have pressurized the companies to maintain their market share by focusing on retaining their current customer.  They are being increasingly confronted with the challenges to attract their subscribers by providing high quality of services.  With the increase in the cost of acquisition of new customers, cellular mobile companies continually seek new ways to acquire retain and increase their subscriber base.  Thus the ability

Retaining existing customers is increasingly crucial in this industry. This is possible only by effective relationship marketing. As a result of the above-stated background, we deem it necessary to conduct research on the topic: “The effect of relationship marketing on customer’s loyalty in Cameroonian telecommunication companies”.

1.2 Problem statement

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